Canadian LGBTQ+ Accelerators and Venture Capital

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Welcome to the Business Gay podcast where we talk about all things business, marketing and entrepreneurship. I’m your host, Calan Breckon, and on today’s episode, I have Sam Naylor. Sam is the chief of staff for Deloitte Canada’s consulting technology executive as well as the firm’s national pride ERG Co-Chair. On the side, Sam is a venture partner for Chasing Rainbows VC and provides operations and strategy advice to a handful of startups and scale ups outside of work. He is the director of Gradient Spaces, a 2SLGBTQI+ start-up founders program. Plus, he serves on the board of directors for QueerTech. His vision and mission is to unlock Canadian venture capital for 2SLGBTQI+ founders. I am very excited for this conversation today with Sam, so let’s jump in.

Welcome to the show, Sam. I am so excited to talk about all these amazing things that we’re going to be talking about today. So how are you?

[00:01:39] Sam Naylor: I’m doing great. Excited to chat with you.

[00:01:44] Calan Breckon: For those listening, we go back to the QueerTech conference in Montreal, which is where we originally met. And so I’m very excited that we get to talk a little bit more about all that today. So let’s start off with the recent news. QueerTech has acquired the Gradient Spaces Founders program. Can you tell us a little bit more about what that program actually is?

[00:02:06] Sam Naylor: Yeah, 100%. So it’s an evolution. I’ve been in this tech volunteer entrepreneurship space for five or six years now. There’s been like a saga of evolution, you could say, and it’s a spawning off of an organization called venture out that evolved into an organization called Gradient Spaces. And the difference between those two organizations is that Gradient Spaces decided to double down on the entrepreneurship program versus being more of a conference community event type of organization. And so Gradient Spaces, I believe, is the first and still currently the only to us LGBTQIA+ accelerator program or we call it a founders program for entrepreneurs in Canada. So it’s pretty unique in that sense that it’s not overly saturated, which is, I wish it almost was more.

So it’s been a completely volunteer run, which isn’t a testament to people’s passion in that space.

And that said, some of the volunteers were looking to figure out how to scale it further, and it was getting to this point where it would require more people in a full time capacity to build up those relationships with venture capitalists, ecosystem partners, the quality and the scope of programming.

And so once we started to hit that barrier, we’ve always had a good relationship with QueerTech. And yeah, basically a conversation started and it made sense for the organization to be acquired by QueerTech for that purpose of scaling. So a lot of volunteers are actually still going to be involved in the program, but it’s just going to be expanded and broadened based on the resources that QueerTech has access to through sponsorship, through the people that they’re able to hire and things like that. So in a nutshell, that’s what the program is. That’s the evolution in terms of where it’s going in the future as well, which I’m very excited for.

[00:04:12] Calan Breckon: Yes, all of us in the canadian ecosystem are definitely looking forward to it and very excited. Can you give us a little bit more detail about when that might start? Like be open and people can join the program?

[00:04:24] Sam Naylor: For sure. There is a waitlist, so hopefully Colin can.

[00:04:28] Calan Breckon: I’ve been on it. I jumped on it. Yeah, I’ll put it in the show.

[00:04:31] Sam Naylor: Perfect. Perfect.

So that’s the way to get notified of when the cohorts do open because we’re going through that integration or merger you could call it just was announced in February. We’re still figuring out what the timeline looks like in terms of transferring over all those relationships and partnerships and making sure there’s a smooth transition there. So that way when we do kick it off, it’s building on what we did previously. So because of that, I think a full blown program, or cohort we call it, probably would be in next year in terms of a larger scale experience, but we are still doing smaller pilots and tests to figure out what we can do differently to improve it. And so one of the things that we’re exploring right now is a partnership at startup Fest in Montreal in July to do a pitch competition for 100K prize. So that’s not necessarily directly part of the founders program, but it definitely is a feeder into that. So that’s an example of where we could get to know certain companies that might be a good fit for our program, get to know various angels who are going to want to sit in on the pitches as judges who would also be donating some of that prime, not donating, but investing some of that prize money.

So I would say that’s an example of a teaser in terms of what it’s going to evolve into because we haven’t previously done a pitch competition through Gradient Spaces of that size or scale. And another thing that we’re exploring, again, this is all we’re working through it, but again, sign up for that waitlist, reach out to me. Happy to talk to you about it, but we are also looking at something in the fall that is more of like a traditional accelerator or founder program, but a little bit smaller in scope to again, build trust with the community throughout this transition, make sure that we are listening to their needs and integrating that into the more full blown version in 2025. SEO in typical startup spirit, things could change, things could pivot, but that’s our current roadmap.

Yeah. And so to folks listening, anybody who is a founder, investor, ecosystem partner, or even a volunteer that wants to get involved, feel free to reach out to me because it’s an important mission. I think it’s exciting and I’d be happy to get folks involved if they want to know more about what that’s going to look like on the ground.

[00:07:01] Calan Breckon: Definitely. And so I know it’s a very brand new baby being birthed in Gradient Spaces has been around and it’s been growing and evolving, but these things take time to get to a certain place like Y combinator has been around for so long and has built a specific ecosystem. When you’re looking at Gradient Spaces and QueerTech and how that’s evolving is there already talks about equity in regards to are they going to take any equity, is there going to be investments happening or is it more informational mentorship kind of accelerator, or is there any details around that kind of stuff you could give us? If not, that’s totally okay.

[00:07:40] Sam Naylor: Yeah, I mean, I’m happy to tell you what we’re thinking about because I’m definitely not the only decision maker in this. Though I’m currently the incoming director of the program. We are going to be looking to hire somebody full time in that role, which we don’t know who that would be at this point in time, but all that to say is I’m definitely involved in a lot of this thinking. And so previously pre acquisition, it wasn’t an equity focused or an equity based accelerator, it was equity free. And the reason for that is we have taken a look at the market and it can be like startups have to be careful early on how much equity they give up. And depending on the accelerator that you’re in and the amount of equity that you’re giving up in exchange for the quality of resources and investment and advisors that you’re getting in exchange. We wanted to make sure that if we are indeed exploring an equity type of relationship, that again, the quality of programming and the people that we’re bringing in from an investor perspective is going to be a worth it for the founders and b not going to be overly dilutive. Right. Because we’re trying to serve an underserved and under resourced and market that already has challenges like accessing resources and opportunities themselves. So it is definitely something we are exploring, but more so for the reason of enabling us to have a more self sustaining program that isn’t overly reliant on sponsorship. But if we were to go down that path, it would definitely be with the intention of making sure that it maximizes serving the community, not the organization of QueerTech so much. But for instance, if a founder opts in to give equity as an option, and that opt in would then allow them to transfer some of their success in the future to us to then help build out the program further, so that this idea of these founders giving back to their own community versus giving back to an investor’s pockets that get lined. So we’re definitely thinking about it, but we’re going to be really, or at least my intention as I talk about this with the team is to figure out if there’s a way to do it that makes sense for the community as well as the founders.

[00:09:51] Calan Breckon: Yeah, very intentional. I really like that because I think I was looking it up and why competitor takes 7%. And the way you’re describing it is there wouldn’t necessarily be like a set number or a mandatory kind of thing, but if you’re contributing back to this organization that helped get you started, you’re then providing the seed money so that the future generations of people who are going to go through this program can continue to go through this program. And I really, really like know, I do believe that I’ve had Brian from StartOut down in the US. He was on the podcast, and StartOut doesn’t take any equity from what I understand as well. So it makes sense that in that kind of space, we’re talking about people who already have lack of access and funds, and it’s more important to kind of get these things running first and doing that before you move into that. So I’m really excited. Looking forward to all the good things that happen there. Now, you personally have joined up with Chasing Rainbows VC recently as well. I know I had Ben on the show talking about what is venture capital and all that kind of stuff. Can you speak a little bit more about why there hasn’t really been any LGBTQ founders programs or VCs until now in Canada? Because talking about Gradient Spaces, QueerTech, and all this, why is it now starting to happen?

[00:11:11] Sam Naylor: Yeah, I think it’s been around for a while, but hasn’t really gotten enough traction, you could say.

And I think there’s been multiple people trying to solve this problem in the States, in Canada, in other parts of the world as well.

And I think the reason why there was an intent there, but it was hard to move the market was because, at least in my perspective, and in my view, is almost like a lack of data. So when we think about Arlen Hamilton is somebody who I’ve looked up to for a long time. She’s a black female queer person in the space. And so I think, as I’ve learned a little bit more about her, her original intent was to build a fund for LGBT and intersectionally identified founders, and that her vision to build a fund was successful, but it required, like, a bit of a pivot in terms of the priority focus, which shifted to female founders and people of color and black folks.

And I think the reason for that is if you’re a fund or even an accelerator trying to pitch investments to investors or limited partners or of that sort, whether they’re wealthy people or institutional investors, they often want to invest in a proven business case.

And even though the business case is there, it was invisible, because how do we get people to self identify to create this data set or to.

But StartOut. I actually spoke with Brian myself about that equity topic. Funny, you know, him and I have similar sentiments in terms of the benefit of sustaining a program through equity, but the other dynamic is know, making sure that the mission stays true. But all that to say is, oh, my gosh, I lost my train of thought.

[00:13:05] Calan Breckon: We’re talking about VCs. Why is it starting now? Because of the data.

[00:13:11] Sam Naylor: Yeah. And so StartOut actually released the report that I think is pretty groundbreaking, at least for North America, and I’m going to pull up the numbers on my screen so I’ll butcher it otherwise. So it was a 2023 report on the state of LGBTQ entrepreneurship. And the data set is 142,000 founders and 95,000 companies that raised money exceeding 250K over the past 22 years. So, like between 2022, which is, I’d say, a pretty robust data set, right? So we can’t really falsify that data very significantly. So what that study or that research showed was that the LGBT founders in that data set created 36% more jobs, 44% more exits, which is what investors really care about. 114 more patents, which is akin to different forms of intellectual property, and all with not even par funding, but 16% less funding than their peers. So when you talk about ROI, they’re much more resourceful, you could say, and you could gritty as well. And keep this in mind, these numbers you’re hearing right now are true. While 7.1% of the population, if we’re looking at the US, which is often comparable to Canada, 7.1% of the population in the US is queer. And these numbers, the funding numbers that I was highlighting before, that lessens that negative 16%, that equates to 0.5% of all VC dollars going to LGBT founders. So it’s definitely very skewed to small numbers or dollars being invested in queer founders. And if I kind of bring up Harlan Hamilton again, her whole thesis is like, so if all these founders have gotten this far on their own with very little, imagine what they could do with a lot more support or funding know, advisors. So why not be on the upside of. So that’s the whole thesis of Gradient Spaces and I’m sure StartOut and all these other accelerators and VCs that are starting to focus on the queer market. But getting back to that question of why now?

I wanted to solve this problem for a while, but I didn’t feel confident enough in my storytelling ability to really pursue this more aggressively, you could say, until that data was available. And as soon as I read that report, I was like, wow, literally. It’s pretty hard to say no. There’s a difference between saying no. It doesn’t fit my thesis between saying no. That’s a bad investment period. Right?

I think it’s still about finding the right investors, finding the right people that care about this cause. And it’s not even a cause. It’s generally a market opportunity at this point. Big one, it satisfies two things, right? So now I think there’s that other piece. It’s not just the mission driven, it’s also ROI driven, right? And so I want to be at the forefront of that because I think I’m uniquely positioned right now, at least in Canada, with, given the work I do with Gradient Spaces and stuff I do with QueerTech and just things evolve over time. So I just want to make sure that because I have these relationships, I want to do what I can to make this happen and get others involved as well to help solve the problem.

[00:16:30] Calan Breckon: Yeah, I think you’ve pointed out a couple of really important things, is that the data just didn’t exist before. We had thoughts and feelings on it and ideas, but the data actually hadn’t been there. No real study had been conducted around it. And I’m aware of the quotes that you brought up from the StartOut study because I talked about that with Brian. I also talked a lot of these things with Ben about know we do perform so much better, and Ben has theories as to why that happened. If you’re curious, you can go listen to that episode as to what his theories are. But it makes sense that now in 2023, this data is starting to come out, and so now people are taking notice and going, oh, you know what? At the end of the day, money talks, and people in those positions really comes down to money. Sometimes it does come down to homophobia and other things, but that’s going to be what it’s going to be. But at the end of the day, money talks in these circumstances. So now that the data is starting to back it up, these kinds of opportunities are starting to kind of come about. I know. I also had Do The WeRQ, Kate and Graham from do the work on the podcast as well, talking about data research that they’re doing in terms of marketing to the LGBTQ community. And we didn’t have these data sets before, and the findings that they’re finding, know, when Bud light did their thing and the big backlash and all the stuff around it, they’re doing research around all this now so they can take that to brands and go, actually, you know what? It hurts you more when you back down, even though in the short term it looks bad. In the long term, if you stick with us and stand by us, it actually gives you a better ROI. But you need to be able to have that data in order to back up those words in order to take it to the brands. And as a community, we just haven’t had that opportunity yet because the world hadn’t let us get to this point. So I’m very excited that things are starting to change and things are starting to migrate into a new direction.

[00:18:29] Sam Naylor: Yeah. And I think it’s like the venture capital landscape or the economic landscape, generally speaking. Been a bit challenging for a lot of people. So it’s interesting that these funds are starting to pop up in a really tough economic climate because I think if these funds are able to survive this economic climate, it’s just like the best time to start a company is in a downturn. Right.

Sounds counterintuitive, but there’s lots of excess. I think Uber is one of those successes. There’s lots of others like that.

[00:18:55] Calan Breckon: Airbnb.

[00:18:56] Sam Naylor: Airbnb. Yeah. I hope I’m right about Uber. By the way, somebody can correct me.

[00:19:00] Calan Breckon: I do believe Uber and Airbnb were both in there. And I also believe. I think both of them did y combinator. I could be completely wrong. I know for sure. Airbnb did y combinator. So accelerator programs do work.

[00:19:11] Sam Naylor: Yeah, they for sure do.

Oh, man, I lost my track of thought. We’re going so many different directions.

[00:19:17] Calan Breckon: I know we could talk about 100 million different things in terms of this. And so what are your plans that you have in partnering up with chasing rainbows? Let’s go down that path a little bit more, because you said you want to be at the forefront of this, but what does that journey look like? Or what do those hopes look like?

[00:19:35] Sam Naylor: Well, I’ll tell the story of how I even got into working with chasing rainbows because I think venture capital is very difficult to get into, especially if you’re not well connected. And I think Ben on his podcast talks about just the lack of, you could say, friends and family that a lot of queer people have that allow them to access these spaces. Sorry, a lot of non queer people have, or just more privileged people have that help them get access to these spaces. So I’m one of those people that I do not have any, I guess I have friends, but I don’t have family, you could say.

And I do have friends, but no friends in the VC space. So I felt very lucky, actually, that I received this opportunity and a lot of it had to do with my volunteer work. Ben actually saw that I spoke on a panel at Clear tech, the panel that you and I met through. And yeah, so we actually started at Salesforce like twelve years ago in one of our previous roles a long time ago. He was from Australia, I’m from Canada. We got sent to a boot camp in San Francisco, which is what Salesforce did for their new hires at that time. And we just kept in touch. We’re both queer. And for the Queer folks listening to this podcast, when you’re the only two queers in this space, there’s just like a sense of comfort there. And so we definitely had that.

Yeah. And I think he’s just pursued entrepreneurship. I pursued nonprofit and tech and entrepreneurship in a different lens. So I actually reached out to him to see what he thought of the accelerator program we have, because he’s done work with StartOut as well in the US.

And I was asking for help. And then I did an offer, which is what they’re always saying, like, do an offer, give an offer. And he’s, you know, you might be a good fit to be a venture partner. And so I met Patrick and it happened. So I’m only telling that story because folks who want to get into venture capital, I’ve been trying to get into it for two years just for like, it is really about relationships. And so I don’t want people to feel like there’s anything wrong with them. If they’re trying to get into it and they’re struggling. I think you just have to leverage. Just continue exploring and reaching out.

It’s difficult to get in. I just want to acknowledge that in terms of what I’m doing with chasing rainbows and why I was a good fit beyond knowing Ben, I think if I think about three legs, probably not the most academic way of phrasing it, but there’s three legs to a venture capital fund these days anyway. And there’s like the companies you choose to invest in. So due diligence and picking the right companies to have in your portfolio, there’s the raising funds. A lot of folks think that venture capitalists have a lot of money. When I say venture capitalists, I mean like an example. Ben is a general partner or venture capitalist, right?

It’s actually 90% of the money in that fund is not the VCs or the general partners, it’s the people that invest. So the second leg is raising funds, which is kind of like selling your thesis to potential investors. And then the third one, which is, I think my main role, is the platform that you give to your companies to help them succeed. So an example of a platform is an accelerator with Gradient Spaces. So a lot of VC funds actually have accelerator esque type of programs or supports for their portfolio companies. And so I was a really good fit for that.

Given what I do with Gradient Spaces for my role as a venture partner. I help them with the platform piece primarily. And the other aspect too, is the international market. So, as we talked about, I’m pretty well connected in the canadian ecosystem. And so they are wanting to raise funds in other countries. So Canada, UK, Europe, as examples.

So I think those are the two things that caught his eye in terms of wanting me to come on. In terms of how I’m spending my time right now, the portfolio is still relatively small. So most of my time is focused on the canadian market and figuring out how do we generate momentum here in the next year or so.

And then I think as the portfolio grows, my role will probably shift into also building the platform for all of the companies in the portfolio as it involves.

[00:23:52] Calan Breckon: Yeah. So correct me if I’m wrong, but it’s almost like a VC for people who are listening to kind of understand these things conceptually. A VC is kind of like a collection of angel investors who have invested in this VC’s portfolio, who says, here’s my money, I believe in you, I trust you to manage this and help it grow for us, instead of going and being single individual angels by themselves, which they could probably still do, and then also companies and organizations could also be involved in that VC. Is that kind of along the way, pretty close?

[00:24:25] Sam Naylor: Yeah. I’m just going to make a small clarification because I think it’ll help because people hear the word angel. And what is an angel? I mean, sky? I don’t know.

Angel investment. If you think about it as like a spectrum in terms of the amount of legalities and contracting that goes into it, the larger the investment, typically the more due diligence that happens. And by due diligence, I just mean like contracting and legal work to make sure both sides are protected. And we know what we’re talking about given the dollar value. So angel is on the very far side of the spectrum with the least amount of typically dollar value. The companies are the least mature.

And then on the very other end of the spectrum is like, there’s so many letters in the Alphabet that Calan go series, ABCD, et cetera, all the way to also IPOs or various types of exits. So angels is way over here. The one thing I wanted to kind of mention is there are such things as angel syndicates, which is different than a VC fund, and the difference between an angel syndicate and a precede or seed VC fund, which is what chasing rainbows is, is again the dollar value of.

I mean, there’s always gray areas, but typically it’s like just the dollar value of investments and the amount of due diligence of the companies that are being done. So, yes, you’re right, it is akin to almost like a syndicate, but we don’t use that term because it’s called a VC fund. But if you want to try to draw an analogy. Yeah, it is kind of like that, but there’s much more documenting and contracting and it’s like a very standard framework typically that gets applied to it.

[00:26:02] Calan Breckon: Got you. Well, thank you for that explanation. Yeah, they say that angels, it’s more about. With angels, especially early angels, it’s more about their investing as you and the individual and the belief of what you’re doing and going. I like this idea and I like you, and I believe you can do it. Whereas VC, there’s definitely more due diligence that has to be done. It’s more business corporatized as opposed to just kind of like take the money and go for.

[00:26:26] Sam Naylor: Yeah, yeah. But funny enough, a lot of angel investors build their reputation through that in order to raise a fund. And that’s what Ben did. So he was an angel investor. And that’s literally part of our pitch to potential investors, like institutional investors. It’s like Ben’s track record as an angel investor.

[00:26:43] Calan Breckon: Nice. Awesome. So how are we hoping this all ties in together with QueerTech and Gradient Spaces and bringing it kind of full circle into the future?

[00:26:54] Sam Naylor: Honestly, it’s murky, but that’s okay. And I think that’s what I like about it, is I think it’s evolving and we’re figuring it out.

I think what we have in common is we all have the same mission in mind, which is supporting the LGBT venture capital and entrepreneurship ecosystem. But I think we all play like a very different role. Right? Like the VC fund is focused purely on investing in queer founders. The accelerator program is focused specifically on helping people get a start in building out their idea and parts of their pitch and connecting them to various mentors to get to the point where they can get an investment. And then Queertech, I think QueerTech and Gradient Spaces, they’re kind of one organization now, right? QueerTech is grading spaces is part of QueerTech now. So I’d say that is a lot of overlap. But the difference between, I say, QueerTech and Gradient Spaces is that QueerTech mandate is broader than just this founders program. QueerTech also runs events throughout the years. Conferences, leadership summits, like access programs to new career paths that people can enroll in and things like that. So a lot of overlap, but I think how support each other in that journey. And I think we’re on the same page. So I think it’s going to be a pretty fun, I don’t know, adventure.

[00:28:12] Calan Breckon: Yeah, I’m very excited for it. So where can people find out about all these amazing things? Do you have websites that they can go to.

[00:28:21] Sam Naylor: Well, the great in Spaces Founders program waitlist I mentioned, so you can check that out. Queertech.org is another one where you can make a profile and get to know people in the community and get notified of any upcoming events.

Tracing Rainbows has a website as well. I’m actually organizing an event in Vancouver.

[00:28:39] Calan Breckon: With going, it’s actually happening this weekend.

[00:28:44] Sam Naylor: Oh, I forgot.

[00:28:47] Calan Breckon: We’re like, about to leave this weekend to go to it. I was like, should we talk about it? I was like, yeah, because I like to give people enough time usually to listen to something and then if it’s coming up. But if you’re in Vancouver, I do believe tickets are like, they’re gone. They were gone like a while ago. But yeah, it’s a very exciting BC event that we’re putting on together with chasing rainbows and venture.

Who else is in there?

[00:29:15] Sam Naylor: Oh, vine ventures.

You can take a look at the link and just see who’s there. If you want to reach out to anybody who’s like a speaker, you can follow up with them. But yeah, we’re doing that event to try to basically get interest from investors to help us raise this fund.

So hopefully it’s successful. And it’s also going to be a great opportunity for founders to meet investors, to meet each other, to meet people at QueerTech and parties, accelerator programs, and just things, magical things happen when these collisions start happening. Right. And so that’s kind of the purpose of this event. And they’re going to be happening in Toronto and Montreal and across Canada. And I think we’re going to do more in Vancouver as well. So if you miss this one, don’t worry too much.

Take a look at that link because.

[00:30:01] Calan Breckon: Tickets may tickets are gone, but Toronto, I think there’s going to be something going on this summer around the collision timeframe. Nothing set and yeah, definitely awesome. Well, thank you so much for being on the show today, Sam. This has been absolutely delightful, and I’m very excited for your future and all the things that are coming down the line for QueerTech Gradient Spaces, chasing rainbows and the space in Canada. I’ve never been more excited about the potential and possibilities that are going to be happening.

[00:30:35] Sam Naylor: Yeah, I’m excited for you too. All the amazing things that you’re working on and working on the events with you. Yeah, it’s going to be a pretty great time. So thank you for bringing me on this podcast. It’s been my first podcast. So very excited about that.

[00:30:48] Calan Breckon: Amazing, magical. All right, well, you have the best day ever.

[00:30:51] Sam Naylor: All right, see you later.

[00:30:52] Calan Breckon: I’m so happy I was finally able to have Sam on the show. I know that he’s doing big things in Canada. I’m really excited to watch his career as it continues to grow and take off know do these fun events that we have coming up. Hopefully I will be able to let you know when more are happening and when that one in the summer is going to be going down, I will be the first to let you know. Thank you so much for tuning in today. Don’t forget to hit that subscribe button, and if you really like the show, please give it a star rating. The Business Gay podcast is written, produced and edited by me, Calan Breckon. That’s it for today. Peace, love, rainbows.